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Monday, August 17, 2009

I'm tired of money

I haven't been updating regularly because frankly, I'm tired of money. Tired of saving it, tired of spending it, tired of talking about it, tired of thinking about it. It's just a phase, probably. I hope.

Part of this has to do with the money situations being faced by my family. It just feels kind of hopeless.

First, I learned that my very well off grandmother is not so well off after all. When my grandfather died, he left her a lot of money--more than $2 million in the bank, plus a house worth $3 million as well as several investment properties. My aunt helped my grandmother manage all the properties and for many years things went fine.

Well, come to find out, one of my uncles had been asking my grandmother for financial help to buy a house and a farm and a bunch of animals. She kept giving it to him (why?!) and...well, the inheritance is gone. He frittered away who knows how many hundreds of thousands of dollars and no one knows where it went. Now family members are turning against each other, trying to force the uncle to sign something saying that he's already received his share of the inheritance, and trying to get a setup where the trustee of the estate has to sign something for Grandma to withdraw money so everyone knows where it's going.

And it's not even a matter of there no longer being an inheritance for my mom and her five siblings. The property taxes on her home and the rental properties totals more than she has left--what is she supposed to do? Go work at Walmart at age 75, after not having a job in 60 years? It's distressing.

Second, I just found out that my parents lost about 80% of their retirement savings last year. They were heavily invested in banks and insurance companies, including AIG. Two years ago, they moved across the state to take my stepfather's dream job, which included a 50% paycut. They felt okay doing this because of the strength of their retirement accounts, and now most of that money is gone. They'll be working for a lot longer than they thought. I always thought of my parents as very financially savvy and stable, and I still think that--they pay off their credit cards every month, save up to pay cash for large purchases, including college tuition for three kids (the fourth went to a school that was outside of the "agreement" so he didn't get any help but he had a big scholarship anyway). They made all the right choices and look where it got them.

I feel like I'm nowhere fanatical enough about saving for retirement, but at the same time, it's hard to psych myself up to be fanatical when there are so many nightmare scenarios of what can go wrong with what I do save. It just makes me want to build a house in the woods to live in, instead of saving up money in a bank.

Just wanted to express my sympathy for your family and what's going on, both with your grandmother and your parents. They both sound like tough situations.

Also, I think it's okay to not be fanatical about financial things all the time. In fact, I think it's preferable. As long as you put the savings on autopilot and don't mess around too much, you should be okay.

That said, I think that the lessons you should take from your family's experiences aren't that any savings plan you have is doomed.

I think the lessons from your grandmother's experience are that love and money need to be separate, you need to pay attention to your own finances no matter how big or small they are, and you need to put the metaphorical oxygen mask on yourself before you take care of others. It's not inevitable that you'll end up in her shoes someday. What happened with her is something that could have been prevented.

And the lessons from your parents are that it's important to be diversified, it's equally important to shift money to safer vehicles as you age, and you need to consider worst-case scenarios when a plan includes a significant pay cut. I know that you think your parents made all of the right choices, but... at least from an outsider point of view, to me, it seems like they made a lot of good choices, but they also made some decisions that weren't so well thought-out. You don't have to take the same gambles, though. You can diversify, you can shift your portfolio as you get older, and you can run worst-case numbers if you/your spouse ever wants to take a job that comes with a paycut.

Spare Change

Welcome! I enjoy reading and writing about personal finance among other topics. I'm not here to give advice, so take anything I recommend with a grain of salt and after seeking legal, financial, or other professional advice.